Less than two weeks after a special session where Illinois lawmakers failed to reach an agreement on changing the state pension systems, S&P downgraded Illinois' credit. It still ranks 49th among the states, better only than California.

S&P credit analyst Robin Prunty acknowledged Illinois has made improvements in its overall budget picture, like this year's huge cuts to health care for the poor, elderly and disabled, but she said it has not been enough. She sees the main problem as lawmakers' failure to reduce pension costs.

"Their pension funds are in a very weak position relative to virtually every other state," Prunty said.

Lower credit ratings can cost the state by raising the interest rate it must offer when borrowing money for things like road construction projects.

Illinois politicians from both political parties rushed to say "I told you so." Treasurer Dan Rutherford is at the Republican National Convention in Florida.

"I've said this before: That if Illinois does not substantively act, particularly on its pension situation, that this downgrade will come," Rutherford said.

Gov. Pat Quinn said he wants to meet with legislative leaders next month to continue trying to find a compromise on reducing pension costs.

"I made clear that if we do not act on pension reform, the state of Illinois would suffer the consequences. Now it has," Quinn said. "Eliminating our $83 billion unfunded pension liability is vital to getting our financial house in order."

Wisconsin Gov. Scott Walker said the bad news shows the "stark contrast'' between Illinois and Wisconsin.

The Republican governor said Illinois leaders failed to take action, while Wisconsin balanced its budget and made long-term reforms.

Walker has tried to use Illinois' economic problems to lure businesses to his state. Last week, though, Illinois landed an aerospace company that Walker was courting.